US corporate profits surge to record as worker payouts wilt

{"text":[[{"start":0,"text":"US corporate profits have hit a record high while workers’ slice of the pie has sunk to historic lows, fuelling discontent among many Americans and a growing political backlash."}],[{"start":19.36,"text":"Pre-tax earnings hit an annualised $4.8tn in the second quarter, or 18 per cent of national income, according to Bureau of Economic Analysis data, the highest share since the aftermath of the second world war. Employees’ share from wages and benefits fell to 60 per cent, the lowest level since the 1950s."}],[{"start":39.24,"text":"“Regardless of what measure you look at, workers, in terms of employee compensation, have been receiving an increasingly small share of national income over time,” said Abiel Reinhart, an economist at JPMorgan."}],[{"start":51.08,"text":"“And the flip side of that is: where is that income going? It’s got to go somewhere. And a good chunk of it is showing up in corporate profit margins.”"}],[{"start":null,"text":"

"}],[{"start":59,"text":"The stark contrast underscores a widening divide that has become a political faultline in Donald Trump’s America, with voters increasingly saying they are unhappy with the direction of the economy and shifting to more populist politics on both ends of the political spectrum."}],[{"start":74.6,"text":"This year’s earnings bonanza has driven US equities to record peaks as the AI boom fuels bumper profits at Big Tech groups and Trump’s Iran war bolsters fuel prices and oil behemoths’ margins. Corporate America’s strong performance has also provided a boost to retirement accounts, which have benefited from strong stock prices and dividends."}],[{"start":94.56,"text":"But the corporate windfall is deepening US inequality. Bumper returns largely benefit richer Americans, who receive much of their income from investments, while middle- and lower-income households rely more heavily on pay cheques."}],[{"start":107.64,"text":"Inflation has also outpaced wage growth, causing real hourly earnings to fall by 0.2 per cent in July versus a year earlier."}],[{"start":115.36,"text":"“The gains that the top is seeing far, far, far outpace the gains — if any — that the bottom is seeing,” said Elizabeth Pancotti, vice-president of policy at the Groundwork Collaborative, a progressive think-tank."}],[{"start":128.28,"text":"“What we’re seeing today is that there are really two separate economies: one for people who make their primary income through investment and passive income . . . and then typical workers who clock in day in and day out.”"}],[{"start":140.24,"text":"Trump has implemented sweeping tax cuts largely benefiting companies and richer Americans, while slashing funding for benefit programmes such as food stamps."}],[{"start":null,"text":""}],[{"start":149,"text":"The widening divide between the fortunes of companies and their investors on one hand and lower-income Americans on the other has prompted a growing backlash from voters alarmed at deepening inequality."}],[{"start":160.6,"text":"Both political parties have adopted increasingly populist rhetoric, while the Democratic Socialists of America have muscled out moderates in Democratic primary races. In New York, Zohran Mamdani swept to power as mayor after lashing out at “corporate greed”."}],[{"start":176.525,"text":"Vice-president JD Vance has struck populist chords in recent speeches, calling for more worker participation in companies’ decision-making. Trump himself has accused companies of “profiteering” and “price gouging”."}],[{"start":null,"text":""}],[{"start":186.88,"text":"“The unfairness of how corporate wealth is distributed is off the charts and people want action to change that,” said Sarah Anderson at the Institute for Policy Studies. “I think we could be seeing the beginning of a serious backlash.”"}],[{"start":200.28,"text":"An IPS study released on Thursday found that chief executives at America’s largest low-wage employers had seen their pay rise 41 per cent between 2019 and 2025, while the median worker took home 21 per cent more — below the 26 per cent increase in prices over the period."}],[{"start":218.48,"text":"Workers have been gradually losing sway in corporate America since the early 1980s as union membership has declined and companies increasingly outsource jobs to external contractors."}],[{"start":229.28,"text":"But the decline in labour’s share of income has gained pace in the past five years and especially over the past 12 months."}],[{"start":236.8,"text":"Experts said it was difficult to gauge if the acceleration was the result of a new underlying shift — such as the impact of AI — or more temporary factors such as high inflation and the post-Covid fallout."}],[{"start":248.12,"text":"“There’s been for several decades a shift in the balance of power from labour to capital in the US,” said Anna Stansbury, an economics professor at the MIT Sloan School of Management."}],[{"start":257.96,"text":"“It seems unlikely that what’s happening now . . . can be used to infer a big secular shift in power beyond the ongoing steady trend that we’ve been seeing for a long time,” she added."}],[{"start":269.32,"text":"“But are there reasons to believe it could be a leading indicator? Possibly . . . Within probably a couple of years we’ll be able to see if this looks more cyclical or secular.”"}],[{"start":283.84,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1787900650_7238.mp3"}